Campbell Reports Higher Net

NEW YORK - Sep 6/07 - SNS -- Campbell Soup Company reported net earnings of U,S. $61 million on sales of $1,594 million during the firast quarter ending July 29, compared to a net of $44 million from sales of $1,454 million during the same three-month period last year.

In reporting ist results, the company said gross margin for the quarter decreased to 40.1% from 41.9% a year ago. While pricing and savings from the company's ongoing productivity program offset cost inflation, gross margin in the quarter was adversely impacted by one-time costs associated with streamlining the company's supply chain organization in Australia and Indonesia and from higher costs of meeting the increased volume needs of the U.S. beverage business.

Marketing and selling expenses were $309 million, an increase of $41 million, or 15%, mainly due to increased advertising and promotional expenses in the U.S. to support soup, beverages, and "Pepperidge Farm" products.

Other Income was $13 million compared to a $4 million expense in the prior period. During the quarter, Campbell recognized a $10 million gain on a settlement in lieu of condemnation on its StockPot refrigerated soup facility in Woodinville, Washington, which was mainly offset by costs incurred throughout the year related to the relocation and start-up costs of the new StockPot refrigerated soup facility in Everett, Washington. Additionally, the company recorded a $3 million gain on the sale of its Papua New Guinea operations.

Sales for U.S. Soup, Sauces and Beverages were $599 million in the quarter, an 8% increase compared to a year ago.

For the quarter, operating earnings were $84 million compared to $114 million in the year-ago period. The decrease in operating earnings was primarily due to increased marketing expenses and higher supply chain costs, partially offset by higher sales.

U.S. soup sales for the quarter were flat compared to a year ago. Condensed soup sales increased 1% and broth sales climbed 8%, while ready-to-serve soup sales declined 4%.

The beverage business posted significant volume-driven double-digit sales growth driven by ongoing consumer demand for healthy beverages and higher levels of more effective advertising. Sales of "V8" vegetable juice, "V8 V-Fusion" juice, and "V8 Splash" juice drinks all increased.

Sales of "Prego" pasta sauces increased by double digits, driven by more effective advertising. For fiscal 2007, sales increased 7% to $3.486 billion.